Medicare Fund Future Still Grim

As is expected, administration officials were quick to credit the Patient Protection and Affordable Care Act with strengthening Medicare's finances by reducing the cost of care. "Medicare spending per beneficiary increased by just 0.4% last year, far below historical averages," Kathleen Sebelius, the Secretary of the Department of Health and Human Services, stated during a press conference to announce the report findings.

The reaction to the Trustee's Report by healthcare stakeholders has been generally positive. Joe Baker, president of the Medicare Rights Center, an advocacy group, noted in a statement that with insolvency delayed by two years, policymakers "have time to test and expand value-driven delivery system and payment reforms designed to improve health care quality while simultaneously driving down the cost of care. The Affordable Care Act offers a blueprint for these reforms, and testing of many promising reforms is already underway."

While praising the slowdown in healthcare spending, Chip Kahn, president and CEO of the Federation of American Hospitals, said in a statement that "hospitals are absorbing more than $400 billion in spending cuts at the same time that Medicare beneficiary enrollment is expanding at an average annual rate of 3%."

Rich Umbdenstock, president and CEO of the American Hospital Association, released remarks saying that hospitals are doing their part to hold healthcare costs down "hospital cost growth at its lowest rate in 10 years."

B B Foonman (6/3/2013 at 4:36 PM)
The so-called "trust" funds are used as a red herring to keep people from realizing that Social Security and Medicare taxes are really just additional personal income taxes. The Medicare "trust fund" contains a "special type" of Treasury Bonds. They cannot be sold to raise the money to make future Social Security payouts. They can only be redeemed by the US Treasury but they are NOT counted as "debt held by the public" like real, marketable Treasury Bonds. The only way a government bond can be redeemed by the Treasury is by the government collecting taxes and fees, or borrowing elsewhere by issuing another bond. All government bonds are effectively a promise to tax in the future. A government bond that the government itself holds is a promise to pay itself in the future, but with what? Future taxes or borrowing. From the "CITIZEN'S GUIDE TO THE 2012 FINANCIAL REPORT": "In addition to debt held by the public, the Government reports about $4.7 trillion of debt outstanding.... It represents debt held by Government funds, including the Social Security and Medicare trust funds. ...these amounts are both liabilities of the Treasury and assets of the Government trust funds," http://www.fms.treas.gov/fr/12frusg/12guide.pdf The "trust funds" are both an asset and a liability to the government, i.e. a wash. The American people would be no worse off and no better off financially if the Social Security and Medicare "trust funds" were simply erased. But the American people would be less fooled if the "trust funds" were eliminated.